Tennessee Yields To Pressure From Doctors, Slowing A Once-Lauded Cost-Cutting Measure

After months of resisting pressure from doctors, Tennessee’s Medicaid program is slowing down an initiative meant to make physicians more cost conscious. They’ve complained about the so-called “episodes of care” payment model since its inception, though doctors initially cooperated with state officials in designing the program.

The first episodes (there are 48, currently) to roll out were the most straightforward. One was a common gallbladder removal. And surgeons like Matthew Mancini of Knoxville are now judged on how they keep all the costs related to that hospitalization under control. If the costs are low, they get a bonus. If high, the reimbursement from the state gets dinged. 

Sounds simple in theory. But Mancini, who is the president of the Tennessee Medical Association, says after five years, it has grown into an “administrative nightmare.”

“They’ve created a model that for every health care dollar, you’re going to spend half of it just trying to figure out how it was spent,” he says.

Doctors have found a lot to disagree with. After all, medicine is complicated. So what if a patient returns to the hospital, but it’s not entirely clear whether the ailment is new or a complication from an old one? There’s also a lot that doctors argue is out of their control, like the cost to operate in their home hospital.

TennCare, which covers 1.4 million low-income Tennesseans, is not halting the program. But the agency is not expanding it as planned for now. It’s unclear when it will meet its goal of 75 episodes, which were supposed to be in place by 2019.

“During this time our team will continue to improve provider engagement and analysis of episode performance data,” TennCare said in a written statement. “We are seeing success and savings with this strategy. We are just as committed today to our goal of paying for value in health care as we were when we began this initiative five years ago.”

The announcement, which was included in a memo to physicians May 30, took many doctors by surprise, given that the TMA has been lobbying for this kind of relief since last year.

“I’m not sure what caused them to take a step back,” Mancini says. “But we’re ecstatic and hoping we can continue to slow this process down.”